Darwinboxan Indian startup that built a SaaS platform for recruitment, onboarding and employee management, has raised $140 million to take over people like Rippling and Deel as it tries to expand internationally, especially in the U.S.
The funding is jointly led by KKR and Partners Group, and combines sales of junior and middle shares, with several investors who declined to be named selling some of the shares. Darwinbox’s investor list includes Microsoft, Salesforce, Sealesforce, Sequoia, TCV, Peak XV (formerly Sequoia India) and Lightspeed.
Darwinbox, which has raised a total of about $270 million in total, has not answered questions about its valuation in the latest round. However, when the news leaked last week Local publishing housethe company’s price is $950 million. The article also received other details correctly, including the lead investor.
If accurate, that would make this fundraising low: Darwin Box raises funds in one place in 2022 Valuation exceeds $1 billion.
In some cases, the two larger startups in the HR-Tech space (Deel and Rippling) are worth about $12 billion to $13 billion. Darwinbox’s other competitors include providers of Point Solutions, as well as large senior incumbents such as SAP, Oracle and Workday, as well as dozens of other companies.
Darwinbox is smaller, but for several reasons, it’s a business worth a look.
For beginners, this is one of the local enterprise startups that have emerged from India and Southeast Asia in the past few years, as the region’s technology ecosystem matures and expands beyond e-commerce.
An investor once described our trend as “SaaS chemistry in Asia”. When you combine it with the large amount of money flowing in the region and its collective population, it should obviously be a region and should look for the next big thing in technology.
The second reason is that this is a noteworthy example of Indian companies trying to outperform their region and gain some appeal in the coveted U.S. market.
Darwinbox said it has more than 1,000 enterprise customers and provides tools to manage employee management of more than 3 million people. It targets mid-market companies with 3,000 employees or more.
The company said that at present, about 60% of its revenue comes from outside India. Jayant Paleti, who founded the company with Rohit Chennamaneni and Chaitanya Peddi, told TechCrunch that the U.S. is the company’s fastest growing market. Paletti said he has moved to the U.S. in Texas to reach the opportunity.
The third reason is that Darwinbox adopts an all-in-one, ambitious approach.
As Paleti describes, HR is one of the oldest enterprise software categories. So while this means there is a lot of old trash with lots of room for improvement, it also means that many systems are deeply rooted. Most of the sales efforts of the startup involve convince users that what they have isn’t good enough and that they’re convinced that the Darwin box is built better.
“When we started in 2015, we almost felt overwhelmed,” he said. “Here, we are a small three-person band in a corner of Asia and we want to build this global company that will attract these traditional players.”
That said, it’s an interesting measure about how Darwinbox can cheer up: When I recently Googled Darwinbox, the first result I got was the company name, but in fact, the link pointed to one of its competitors Sage. Several other competitors, including Oyster, also apparently also purchased locations for Darwinbox searches.
While the broader enterprise IT industry revolves around point solutions or platforms are the best choice for end users, the startup’s focus has remained very odd to date. Its purpose is to build an end-to-end platform that can not only be used for source and management recruitment, but also on board employees, managing their management (fees, holidays and time work, payroll, etc.) throughout the work period and beyond.
Paletti said the next phase of the product could involve more AI, and he believes the company is put in a good execution situation due to its platform approach: it can serve as a whole.
“We are the system of record for human resources,” he said.
Partners Group is one of the two major investors in the round, with a $75 million stake in the deal’s private equity firm Cyrus Driver.
The driver said his company had wanted to invest for a few years, but only this round had the opportunity. “We think they are one of the few disruptors in the larger space,” he said, noting that the startup’s localization capabilities are also an excellent feature because of its growth.
“We did a lot of due diligence and they had faith in the right to win.”
